The final quarterly figures announced by BRAIN FORCE HOLDING AG, a leading IT services provider with operations in Austria, Germany, Switzerland, Italy, the Netherlands and the Czech Republic, confirm the good preliminary results achieved in the third quarter of 2008, which were already published on November 12, 2008. Therefore, BRAIN FORCE HOLDING AG continued its successful growth path in the third quarter of 2008, focusing on its goal of increasing profitability. As a result, the company has significantly improved earnings for the fourth successive quarter.

 

In the first nine months of 2008, the BRAIN FORCE Group was able to grow revenues by 10% to EUR 78.32 million. EBITDA improved from EUR –1.56 to +5.66 million, and EBIT increased to EUR +2.68 million, compared to the previous level of EUR –17.42 million in the first three quarters of 2007, which included extraordinary depreciation of EUR 11.74 million and restructuring costs of EUR 2.41 million. A comparison on a purely operational level shows a significant EBIT rise from EUR –3.27 to +2.68 million in the first three quarters of 2008.

 

“All Group subsidiaries including the Holding company contributed to this gratifying development”, according to Günter Pridt, Chief Executive Officer of BRAIN FORCE. The most significant earnings improvement was generated by cost savings and the optimization of the service portfolio in Germany. In the Region Central and Eastern Europe, EBIT in the Austrian Professional und Payroll Services areas posted a considerable rise, whereas the Service Management business of SolveDirect has yet failed to reach the planned performance, but made good progress. South West Europe generated a significantly higher operating result, and North Europe improved considerably compared to the preceding year thanks to increased service revenues in the Netherlands. “The Holding company also made an important contribution to the EBIT increase by achieving cost savings of about EUR 0.45 million in a year-on-year comparison”, Günter Pridt adds.

 

In the third quarter (July to September 2008), the BRAIN FORCE Group succeeded in growing revenues by 10% to EUR 26.06 million. In the same period, the Region Germany achieved a 17% rise in revenues to EUR 13.39 million. For the total year Germany accounts for close to half of Group revenues. The Region North Europe also posted strong top-line growth, expanding by 35% to EUR 2.61 million. South West Europe generated revenues of EUR 6.39 million which is the same level as last year, whereas revenues in Central and Eastern Europe declined by 7% to EUR 3.66 million due to declining third quarter demand in the Professional Services area in Austria. Group EBITDA rose from EUR –2.86 to +1.77 million in the period July to September 2008, whereas EBIT improved to EUR +0.82 million, up from EUR -6.68 million in the preceding year.

 

“The cash flow from operating activities developed in a very satisfactory way during the first three quarters of 2008. It rose from EUR –3.24 to +2.06 million, reaching a level of EUR +1.58 million in the third quarter of 2008 alone”, says Chief Financial Officer Thomas Melzer. The improved cash flow is chiefly related to higher Group earnings. The cash flow from investing activities amounted to EUR -5.21 million in the first nine months of 2008 (previous year: EUR -10.17 million), of which EUR -2.34 million relate to earn-out payments for past acquisitions. Moreover, a total of EUR 1.66 million was invested for proprietary developments and other capital expenditures. As at September 30, 2008, the balance sheet total of the BRAIN FORCE Group reached EUR 70.56 million and equity totaled EUR 27.36 million. Accordingly, the equity ratio improved to 39%, up from 35% at the end of 2007, which can be attributed to higher earnings. Net debt on the balance sheet date of September 30, 2008 was EUR 8.81 million compared to EUR 6.53 million as at December 31, 2007. “This increase is related to the earn-out payments made in the second quarter. However, the good cash flow enabled the BRAIN FORCE Group to reduce net debt by EUR 0.81 million in the third quarter”, CFO Thomas Melzer adds.

 

In its ad-hoc announcement on November 12, 2008, the BRAIN FORCE managing board pointed to risks related to a convertible bond of Kemp Technologies Inc., New York, which the former managing board subscribed, as well as an amendment to Germany’s Corporate Tax Law envisioning the complete elimination of tax loss carry-forwards for all German companies or subsidiaries in which an equity stake exceeding 50% was acquired after January 1, 2008. The financing of the BRAIN FORCE Group is independent of these developments, and is to be considered as secure on the basis of the positive cash flow as well as a sufficient cash position and lines of credit.

 

Due to the very positive development in the first nine months of 2008, the Managing Board has revised its original guidance upwards in respect to the operating earnings for the full-year 2008, as announced in the ad-hoc announcement made on November 12, 2008. “We now anticipate an EBITDA of at least EUR 7.0 million (previous guidance: EUR 6 to 7 million), and an EBIT of over EUR 3.0 million (previous guidance: EUR 2 to 3 million). Revenues are expected to surpass the EUR 100 million mark“, concludes CEO Günter Pridt. Due to the global financial crisis and the uncertain market environment, a precise earnings guidance is impossible for the upcoming year. However, the management of the BRAIN FORCE Group will continue to carefully monitor costs and investments, and react quickly and determinedly to any potential deterioration of its earnings situation, in order to also achieve a clearly positive operating profit in 2009.

 

The detailed Q3 quarterly report 2008 is now available to be downloaded at www.brainforce.com.